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Multistate Tax alert archive

State tax legislative, judicial, and administrative developments

​The Multistate Tax alert archive includes external tax alerts issued by Deloitte Tax LLP's Multistate Tax practice during the last three years. These external alerts highlight selected developments involving state tax legislative, judicial, and administrative matters. The alerts provide a brief summary of specific multistate developments relevant to taxpayers, tax professionals, and other interested persons.

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Most recent Multistate tax alert

Multistate impact of federal PATH act's "business extenders" provisions

On December 18, 2015, President Obama signed into law the federal Protecting Americans from Tax Hikes Act of 2015, a component of H.R. 2029 (PATH),1 which makes permanent several lapsed business incentives, including the research credit and the subpart F exception for active financing income, as well as renews a handful of provisions—such as bonus depreciation—for five years. Other provisions are extended through 2016. In some cases, provisions are extended with modifications, while certain others are extended subject to a phaseout. Among the dozens of provisions that are now made permanent or extended retroactive to the end of 2014 and/or modified prospectively under PATH are the following:

  • Credit for certain research and experimentation expenses
  • 50 percent bonus depreciation provisions for qualified property, and the election to accelerate some alternative minimum tax credits in lieu of bonus depreciation
  • Active financing income exception and the application of the controlled foreign corporation look-through rule (the later of which is extended five years)
  • Increased expensing limits for Internal Revenue Code (IRC) § 179 property and the expanded definition of § 179 property
    15-year straight-line cost recovery provision that applies to certain leasehold, restaurant, and retail improvements, as well as restaurant buildings
  • Reduced holding period for the S corporation built-in gains tax
  • Capital gain exclusion on qualified small business stock 

These federal law changes may have a significant effect on state corporate income taxes depending on each state’s adoption of the IRC and each state’s decoupling provisions. In general, states with automatic or “rolling” IRC conformity would adopt the provisions of PATH unless specific-state legislative action is taken to decouple from some or all of the federal law changes. Some states effectively adopt the IRC by referencing federal taxable income as the state income starting point. Although these states do not specifically adopt the IRC in whole or in part, they would generally be viewed as following provisions of PATH that affect federal taxable income. Other states adopt the IRC as of a specific date; do not adopt the IRC provisions in totality; and/or provide for delineated modifications, variations, or exceptions to certain adopted IRC provisions. For these states, further analysis is needed to determine the extent to which certain provisions of PATH are followed (i.e., does the state adopt the IRC as of December 18, 2015, or include the specific provisions in the state’s code?), bearing in mind that many states do not make such conformity updates or decoupling determinations until the tax filing season begins.

This tax alert provides examples of the effect of certain provisions of PATH on state corporate income taxation in general.

2014 Multistate Tax alerts

Find out what you missed in 2014. Explore our archive.

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2013 Multistate Tax alerts

Key updates in 2013. Explore our archive.

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